Judge OKs AT&T merger with Time Warner

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A USA federal judge on Tuesday cleared the mega merger between AT&T and Time Warner in an antitrust case with potential far-reaching implications.

"The impact from this decision will have wide reaching ramifications across the telecommunications, media, and tech industry for decades to come", said GBH Insights analyst Dan Ives.

The merger's approval was a stinging defeat for the Justice Department, which could move to appeal Leon's ruling. In addition, T-Mobile and Sprint are direct competitors, so their merger is perhaps more likely to be seen as anti-competitive than a union of AT&T and Time Warner. It could also threaten to withhold content from Time Warner channels, such as CNN, HBO or TNT, from rival services in order to gain a competitive advantage for AT&T's TV services.

Leon said the government had "taken its best shot" to oppose the merger. Bush appointee, handed down his decision approving the $85 billion merger with no conditions on Tuesday afternoon, following months of oral arguments and deliberations.

AT&T argued that the merger will help customers without harming AT&T's business rivals, and that the combined company wouldn't have enough market power to raise antitrust concerns.

In after-market trading following the ruling, shares of Time Warner rose almost 5 percent and AT&T shares fell 1.6 percent. Last fall, he presented AT&T and Time Warner with two options: Sell the majority stake in either DirecTV or Turner Broadcasting. President Donald Trump, while still a candidate, said he would block the deal "because it's too much concentration of power in the hands of too few". A clear win for AT&T will embolden Comcast, the US's largest cable company, to top Walt Disney's $52bn bid for 21st Century Fox, the media empire controlled by Rupert Murdoch and his family.

The ruling is a stinging defeat for the Justice Department.

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During the trial, the judge heard from dozens of witnesses, including AT&T CEO Randall Stephenson and Time Warner CEO Jeffrey Bewkes.

Using unusually strong language, Leon said it would be "manifestly unjust" for the government to ask him to put his own ruling on hold, because if he were to do so, it could have the effect of killing the deal, which has a deadline for completion of June 21.

The government's case hinged on an economic model produced by Carl Shapiro, an economist at the University of California at Berkeley, who predicted an annual price increase to consumers of at least $285 million.

"We are gratified that the court's decision to categorically reject the government's bid to block this historic merger", he said.

Judge Richard Leon said the U.S. government failed to meet the burden of proof that the tie up between the largest United States pay TV operator and media entertainment giant Time Warner would harm competition.

AT&T has said it needs to buy Time Warner to compete with the likes of Amazon, Netflix and Google in the shape-shifting streaming-TV environment.

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